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Home / Firms / FCA Innovation – fintech, regtech and innovative businesses / How to prepare an Advice Unit application

How to prepare an Advice Unit application

First published: 
01/06/2016
 Last updated: 17/01/2020

To apply to receive regulatory feedback from the Advice Unit, you need to show how your model meets our eligibility criteria. You should also read what we’ve learned from previous applicants.

Eligibility criteria

In the Advice Unit application form, you have to explain your proposition and show how it meets our eligibility criteria:

Criteria Positive indicators Negative indicators
Potential to deliver lower cost advice or lower cost guidance to unserved or underserved consumers
  • Model caters for consumers who do not have significant wealth or income.
  • Model serves consumer segments that are likely to benefit from advice or guidance but where existing supply/demand-side barriers currently limit take up.
  • Firm has considered its target market and the number of consumers that might gain access to advice or guidance.
  • Model is targeted at wealthier consumers or 'niche' consumer segments.
  • Model is targeted at consumer segments where there is no evidence of supply/demand-side barriers limiting take up.
  • The consumer segmentation and target market analysis is unclear.
Genuine consumer benefit
  • Model is likely to deliver lower cost advice or guidance for target market consumers.
  • Firm can demonstrate how model is likely to deliver positive outcomes for targeted consumers.
  • Firm cannot demonstrate that the model will deliver positive outcomes for targeted consumers.
  • The model offsets its lower costs by charging higher product costs to consumers.
Automated proposition
  • Core element(s) of the customer journey are automated. This may include some of the following: collecting fact find information, collecting underwriting information, conducting customer risk profiling, undertaking a suitability or appropriateness assessment,  identifying suitable debt options, etc.
  • Limited parts of the model are automated.
Clarity of proposal
  • Firm has developed a clear proposal that outlines the consumer journey, consumer outcomes and how potential risks will be mitigated.
  • Firm has considered and taken a view on how regulations may apply to their business model.
  • The proposal is not clearly defined.
  • No regard has been given to regulatory obligations and the specific areas where Advice Unit input is required.
Sector
  • Focused on the following sectors: investments, pensions (accumulation/decumulation), protection, mortgages, debt, general insurance.
  • The model is not focussed on delivering advice, guidance or discretionary investment management services in one of the sectors listed.
Need for regulatory input
  • Model raises questions in respect of the regulatory framework which are new or difficult for the firm to resolve through existing FCA rules and guidance.
  • The model does not raise new or difficult regulatory questions.
  • The firm has already launched its proposition in the UK.

Further information in relation to the eligibility criteria can be found below:

  • References to ‘regulated advice’ should be interpreted as including debt advice.
  • References to ‘guidance’ should be interpreted as including:
    • (a) for automated investments, pensions, protection, mortgage and general insurance models, information provided to consumers that does not involve regulated advice
    • (b) for automated debt models, generic information provided to consumers about debts that does not involve regulated advice.
  • Firms offering execution-only models without regulated advice, guidance or discretionary investment management services will fall outside the scope of the Advice Unit.
  • References to ‘protection’ mean ‘pure protection contracts’, see definition in the Glossary to the FCA Handbook.
  • References to the ‘mortgages’ sector should be interpreted as including firms involved with ‘regulated mortgage contracts’ (see definition in the Glossary to the FCA Handbook) and firms offering automated models in the equity release market. 
  • References to ‘debt’ means ‘debt-counselling’, see Article 39E of the Regulated Activities Order as amended.
  • References to firms having already launched their proposition in the UK do not include those firms that are now looking to develop a new model or revise their existing model.

What we’ve learned from previous applications

Firms applying to the Advice Unit should consider the following points before applying.

Sector

Your proposed automated model must focus on one of the following sectors: 

  • investments
  • pensions (accumulation/decumulation)
  • protection
  • mortgages
  • debt advice
  • general insurance

If your model relates to another sector, we cannot provide you with feedback.

Firms with innovative advice or guidance models in sectors not covered by the Advice Unit can apply to Direct Support.

Regulatory input

You must have a genuine need for regulatory input. You will need to show which specific areas of the current regulatory framework are causing new or difficult questions. 

We cannot provide a ‘sense check’ of your model against the regulatory framework. We also cannot provide feedback on your model if you have already cleared up any regulatory uncertainties and launched your model.

Success criteria

To be successful, applications must:

  • clearly show what service their model provides to consumers
  • clearly show how they and their proposition satisfy each of our eligibility criteria and address the majority of the positive indicators in the application
  • articulate where there is a specific need for regulatory input, having considered our rules

Successful applicants

We will contact all successful applicants in writing. We will then arrange a meeting to discuss their model and the areas where they require specific regulatory feedback.

Unsuccessful applicants

We will give all unsuccessful applicants feedback on our decision. We will explain why they didn’t meet our eligibility criteria and, where possible, explain how this can be rectified. Where appropriate, we may refer the applicant to other areas of the FCA to discuss their business model further. 

Businesses seeking authorisation

Unauthorised businesses applying to the Advice Unit will have their applications for authorisation assessed through the normal authorisations process. They must meet our Threshold Conditions in order to be authorised and complete the relevant application forms.

Charges

There is no charge for the regulatory feedback we provide to businesses within the Advice Unit.

Apply for Advice Unit

You can apply for Advice Unit support using our Advice Unit application form. In addition to the information that applicants provide, in our assessment of applications, we may take into account any other relevant information and circumstances about the applicant and application.

From 30 June 2017, the Advice Unit accepts applications from firms throughout the year, rather than on the previous cohort basis.

If you would like to have an initial conversation about your proposition before you apply, you can email us at [email protected] or call 0800 458 4161.